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States' Financial Practices Get Graded

Take Illinois. The state went two years without a budget and saw multiple downgrades from ratings agencies. But it was still able to float bonds and easily find buyers because no state in the modern era has defaulted on its debt. "There's no reasonable risk of a state actually defaulting," Matt Fabian, a principal at Municipal Market Analytics, which consulted on the report, said at the report's release. "But you had the governor and legislature acting in completely unpredictable ways that belied the understanding of almost anyone. So, the bonds of Illinois ended up trading almost like a day stock which is terrifying to anyone in the market."